Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London. Subscribe to the City Briefing e-mail.

Greek agony drags on as Asphyxiation Bloc wins

Europe’s establishment is delighted by the victory of New Democracy and pro-asphyxiation bloc. This relief is unlikely to last much beyond today, if that.

Greece’s new leaders have a mandate from Hell. Almost 52pc of the popular vote went to parties that opposed the bail-out Memorandum in one way or another. There is no national acceptance of the Troika’s austerity policies whatsoever.

The hard-Left Syriza party of Alexis Tsipras is arguably more dangerous in opposition, now fortified with big bloc of seats in Parliament. He can lacerate the government without responsibility as the state sheds 150,000 public sector workers, a fifth of the total.

It was for this outcome that the Greece’s elected government was toppled last year in an EU Putsch. We now learn from ex-premier George Papandreou that this was "all Sarkozy’s fault".

France’s leader refused to let Papandreou call a referendum on the bail-out terms (which would almost certainly have passed), and Chancellor Angela Merkel went along with this shoddy act of EU colonialism. The EU threatened, in effect, to cut off Troika payments. The PASOK government was replaced by an EU-appointed technocrat.

A frightening precedent was set, and for no purpose. All the EU has achieved is to replace a truculent Greek parliament with one that is completely unworkable.

As for New Democracy, it cannot meet the terms of each quarterly Troika payment in the future even if it secures the support of PASOK socialists because the terms are – politically – impossible to meet.

Year after year of "internal devaluation" will drive unemployment to catastrophic levels before it breaks the back of the labour movement sufficiently to clear the way for drastic pay cuts. It is basically a Fascist policy. Mussolini pulled it of in 1928 under the Lira Forte policy, but he had coercive advantages.

The electoral settlement is not decisive enough to lance the boil either way so there will no recovery of investment or hope of return to normal life. Even big companies have lost access to routine trade credit. The pro-Memorandum chorus say Greece would face chaos if it left the euro. What do they think it is now?

The agony will drag on until some dramatic event intrudes.

It would be a different story if the Troika knew what it is doing. It does not. The experts from the IMF have been overruled by the ideologues from the ECB. The necessary liberation of euro exit was ruled out from day one – obviously – so the Troika has been making things up as it goes along.

Their original forecasts massively understated the level of GDP contraction because they falsely assumed that the Greek private sector would take the baton from the shrinking government.

All that happened is that the state stopped paying its bills to private subcontractors, pushing thousands of firms into bankruptcy. The economy spiralled downwards with an entirely predictable ferocity.

This is what Professor Vanis Varoufakis from Athens University has to say about the Troika policies (via Naked Capitalism):

"Consider what they are telling the Greek people: They are saying that Greece, to remain in the Eurozone, must,

(a) carry on borrowing from the EFSF at 4% (and thus adding to Greece’s public debt) in order to pay the ECB (which will be making a 20% profit from these payments, courtesy of the fact that it had previously bought Greece’s bonds at a 20% to 30% discount)

(b) reduce public spending by 12 billion euros in order to be ‘allowed’ to borrow for the benefit of bolstering the ECB’s profits from these transactions involving bankrupt Greece.

If the Devil wanted to guarantee that Greece is pushed out of the Eurozone, he and his evil handmaidens could not make up the above, satanic, scenario. Meanwhile, the same happens in Spain, where the government is forced to borrow money (at nearly 7%) it can hardly raise in order to shore up banks that are borrowing from the ECB (at 1%) to lend to the Spanish government (at 7%) so that the latter can… bail them out. Not even the sickest of minds could make this up!"